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Weak Start to the Week
Mon, 25 Apr Closing

Indian equity markets languished in the red throughout today's trading session on the back of selling activity across power, metal and PSU stocks. While the BSE Sensex today closed lower by 160 points, the NSE-Nifty closed lower by 44 points. The S&P BSE Mid Cap index and the S&P BSE Small Cap index closed the day lower by 0.2% and 0.4% respectively.

Asian markets finished lower today with shares in Japan leading the region. The Nikkei 225 is down 0.76%, while Hong Kong's Hang Seng is off 0.76%; China's Shanghai Composite is lower by 0.42%. European markets are lower today with shares in Germany off the most. The DAX is down 0.86% while France's CAC 40 is off 0.81% and London's FTSE 100 is lower by 0.43%.

The rupee was trading at 66.68 against the US$ in the afternoon session. Oil prices were trading at US$ 43.14 at the time of writing.

According to a leading financial daily, Tata Power Solar, a wholly owned subsidiary of Tata Power, has successfully commissioned a 20 kW solar rooftop project for Raj Auto, a Hero MotoCorp showroom, in Aurangabad. The net metering policy has been recently introduced by the Maharashtra Government this year and the 20 kW project is one of the first such implementations of its kind in the state.

With the completion of this solar project, Tata Power Solar has helped Raj Auto meet 100% of its power requirement through renewable energy. The 20 kW rooftop project set up in the showroom has reportedly used 80 solar panels, manufactured by Tata Power Solar, and will generate 33,000 units of power and offset 23 tonnes of carbon dioxide annually. The company together with its subsidiaries and jointly controlled entities has an installed gross generation capacity of 9,100 MW and a presence in all the segments of the power sector viz. Fuel Security and Logistics, Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading. Tata Power finished the day down by 0.4% on the BSE.

Meanwhile, The Economic Times reported that power demand in the country may be lower by 15% for five years starting FY18. Reportedly, with surplus installed generation capacity and low demand, the domestic power plants are expected to operate at low capacity of 55-60%. The demand was growing at a reasonable rate till the last three years. Economic slowdown and cyclical correction has led to a decline in demand.

The power sector is going through troubled times. The State Electricity Boards (SEBs) that buy power from generators are reeling under huge losses and bloated debt (Subscription Required). The capacity utilization level or the plant load factor (PLF) of generating companies has been on a steady decline over the years. As per the annual report from the Ministry of Power, the PLF has fallen from a peak of 78.6% in FY08 to about 65% upto November 2014.

Power stocks languished in red today with Power Grid Corporation and Adani power bearing majority of the brunt. However, Cesc Ltd and Gujarat Industries Power Ltd managed to finish in green.

Selling activity was witnessed across majority of the healthcare stocks with Indoco Remedies and Torrent Pharma leading the losses. Shares of Piramal Enterprises finished the trading day on an encouraging note (up 3.3%) after it was reported that the company has invested Rs 2.56 billion in Sanghi Industries, a Kutch-based cement company with production capacity of 4.1 million tonnes a year (mtpa). The investment made through non-convertible debentures would enable Sanghi to repay some of its debts ahead of schedule and save on interest outgo.

Piramal Enterprises is one of the leading players globally in CRAMS (custom research and manufacturing services) as well as in the critical care segment of inhalation and injectable anesthetics. It also has a strong presence in the OTC segment in India.

Recently, the Indian Health Ministry announced a ban on 344 fixed dosage combination (FDC) drugs. The ban came after an expert committee's recommendation. The pharma companies will have to suspend the manufacturing and sale of drugs that fall into this category, including cough syrups, analgesics, and antibiotic combinations. In our recent edition of The 5 Minute Wrap Up Premium, we explain how the FDC's pose a new challenge for the pharma companies (Subscription Required).

By the way, Equitymaster turned 20 years old last Friday. Our founder, Ajit Dayal, recently wrote about what this achievement and your continued support means to all of us at Equitymaster. Please do read the note Ajit penned for our 20th birthday.

Also, Ankit Shah, in a recent edition of The 5 Minute WrapUp, interviewed Ajit to get some colour on Equitymaster's 20-year journey.

Ajit gave a fascinating glimpse into the long-term vision behind the launch of Equitymaster...and the early stumbling blocks, including the event that nearly killed the company!

Here's a snippet:

    We were part of the evolution of the capital markets. We always wished to be the thoughtful, sensible unemotional view on what was happening in the Indian economy, the global economy, or company earnings and its eventual impact on share prices. We were trying to protect the retail Indian investor from their own emotions of fear and greed and from a well-trained army of financial foot soldiers who were out to grab their wallets.

    We believed then that a better informed investor, a well-educated investor, can make sensible returns on their investments in stock markets. We still believe that but with one modification. There is a saying that you can lead a horse to water, but you cannot force it to drink.

    In a similar way, I believe that there are many people out there who wish to stay thirsty: They have no desire to learn and understand. They work hard, they save money, then - at some dinner party - they are sold some story and they give away their savings to a smooth-talking financial intermediary. And their wallet is gone. In a bad world, Equitymaster is an open oasis: Those who wish to seek shelter and shade are welcome.

This is just a taster. If you have not read this interview already, we urge you to do so right away...

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Apr 21, 2017 (Close)

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